ASEAN divided on PRC's South China Sea "tradeoff"

Michael Richardson, a visiting senior research fellow at the Institute of South East Asian Studies in Singapore, argues that the People's Republic of China offers its Asia Pacific neighbors a giant economic engine "if they hitch their wagons to the train".

The mutual benefits, he wrote in The Japan Times, "are evident in the China-ASEAN Free Trade Agreement (CAFTA), the largest such accord among developing nations and the third biggest trading block, in terms of GDP, after the European Union and the North American Free Trade Agreement linking the US, Canada and Mexico" :

• Two-way trade between China and South East Asia rose from $8 billion in 1991 to nearly $293 billion in 2010 ... jumping a further 25% percent in the first half of 2011 and with South East Asia enjoying a surplus of nearly $11 billion.

• Gao Hucheng, China's vice minister of commerce, is confident that the annual value of ASEAN-China trade will reach $500 billion by the end of 2015. 

• Rising wages will prompt Chinese industries to invest in lower-cost parts of South East Asia. China-ASEAN investment reached $80 billion by mid 2011, with Chinese investment in South East Asia amounting to $13 billion.

"Chinese officials have been urging ASEAN to accept a tradeoff," Richardson states. "Do not contest Beijing's 'indisputable' claim to control about 80% of the maritime heart of South East Asia in case it leads to conflict and upsets the promise of a bright economic future."

However, "Vietnam, the Philippines, Malaysia, Indonesia and Singapore, have challenged the legitimacy of China's claims. They have also strengthened their defences and sought support from the US, Japan, India and other outside powers that have interests in the South China Sea. Australia has done likewise."